Operating activities are the functions of a business that are directly related to providing its goods and/or services to the market. These activities are the companys core business activities, such as manufacturing, distributing, marketing, and selling a product or service. Operating activities will generally provide the majority of a company’s cash flow and largely determine whether it is profitable. Some common examples of operating activities include cash receipts from goods sold, payments to employees, taxes, and payments to suppliers.

Operating activities are distinguished from investing or financing activities, which are functions of a company not directly related to the provision of goods and services. Instead, financing and investing activities help the company function optimally over the longer term. For example, the issuance of stock or bonds by a company are not counted as operating activities.

The reporting of operating activities helps clarify the focus of the business and its earning potential, with two key measures being cash flow from operating activities and cash flow trends over time. Non-operating activities are one-time events that may affect revenues, expenses, or cash flow but fall outside of the company’s routine, core business. Examples of non-operating activities include relocating the business, expenses caused by weather damage, acquiring another firm, buying or selling capital assets, drawing down or paying off a loan, and issuing new shares.

In summary, operating activities are the daily activities of a company involved in producing and selling its product, generating revenues, as well as general administrative and maintenance activities. They are the core activities that a business performs to earn revenue and affect the cash flow coming in and out, determining the net income of the business.